A landmark deal, or smoke and mirrors? The lows and highs of COP28

After controversy, collaboration and hundreds of column inches, the annual COP climate conference has finally concluded.

There was a lot to get done, and at the end of a year that’s seen record temperatures, humanitarian and natural disasters and heightened warnings from scientists that we are dangerously close to a global tipping point, the stakes could not have been higher.

For environmentalists, the story initially looked set to be a disappointment, with the first Sunday of the conference producing some comments that were a little surprising to hear from a COP president.

His Excellency Dr. Sultan Al-Jaber, the UAE’s Special Envoy for Climate Change and CEO of the Abu Dhabi National Oil Company kicked off the proceedings by insisting there is no science to back the call to phase out fossil fuels.

Shortly thereafter, the Global Stocktake. The Stocktake is a detailed assessment of progress made since the Paris Agreement and a review of collective efforts to stay within the agreed 1.5-degree temperature rise limit.

The stocktake showed that we are far from being on track, with many countries failing to make updates and recording of emissions data considered to lack accuracy.

Friends of mine on the ground insisted that whilst Al-Jaber’s comments and the poor rate of progress stole all the headlines, with the media hinting the conference could end without any real direction, the mood around the Blue Zone was much more optimistic.

Money makes the world go round

One of the early successes of the COP was the creation and mobilisation of a “Loss and Damage” Fund. Cyclones, forest fires and other climate-related disasters disproportionately impact the poorest countries in the world. The Loss and Damage fund means countries that are most affected by climate disasters will have access to finance dedicated to mitigating the impacts of those events.

Such a Fund has been talked about for years and the commitment to create it was gained at COP27 in Egypt last year, but the decision-makers never got round to actually doing it.

Now, the Fund has been mobilised with the money managed by the World Bank. With initial commitments of $450M, it won’t be enough but politically this is a hugely important start.

Finance has been a big topic at many of the recent climate conferences, including COP26 in Glasgow, and this year was no different.

The Global Climate Finance Centre (GCFC) was officially launched at COP28, setting up a centre dedicated to overcoming obstacles associated with financial frameworks and to ensure climate finance becomes “available, affordable, and accessible.”

There has also been renewed support for the Climate Investment Fund Capital Market Mechanism which aims to attract co-financing for green projects in emerging and developing countries, some of which may be of interest to financial traders and carbon traders alike.

Carbon Markets

Another topic that has been haunting COP agendas for years is the carbon market.

Under the Paris Agreement in 2015, the world agreed to create a carbon market to keep us below 1.5 degrees centigrade of global warming. Within this, every country must set out their NDC – nationally determined contribution for how it will reduce emissions within its borders.

According to IETA, an organisation that deals with carbon trading, around 80% of countries rely on carbon trading to deliver their contribution.

This means that if we are struggling to meet targets here in the UK, we could choose to pay for Climate Change mitigation schemes in Uganda or Vietnam instead of investing in our ancient “difficult-to-decarbonise” infrastructure.

Paying to help another country to electrify instead of ploughing the finance into our own networks may sound politically backward, but it is an effective way of getting money moving, help raise standards of comfort in the developing world and deter those nations from repeating the fossil-fuelled errors of the West’s industrial past.

But when investing in such schemes, how do you know that a tree would really have been cut down, or a coal-fired power plant would really have been built without the intervention? Any market that is going to work, needs to have the trust of its participants, and trust is usually engendered through transparency.

Offsetting emissions through the purchase of carbon credits does not have unilateral support amongst environmental professionals; some businesses embrace offsets as part of their decarbonisation roadmap, whilst others prefer to invest in energy efficiency. The Science Based Targets initiative does not recognise carbon credits except as an option for neutralising residual emissions or to finance additional climate mitigation.

Alongside COP, the World Bank unveiled its ‘Engagement Roadmap for Carbon Markets’, which sets out plans to generate a robust supply of high integrity carbon credits and increase efforts to shape a trusted global carbon market.

Transport

Decarbonising transport is a crucial but challenging aspect of the energy transition, with transportation responsible for approximately one quarter of global greenhouse gas emissions.

Whilst the CEOs of the world’s leading shipping firms issued a joint declaration at COP28 calling for an effective greenhouse gas pricing mechanism to accelerate the transition to green fuels and an end-date for the building of new fossil-fuel only shipping vessels, transport was not an area of discussion that resulted in great announcements this year.

Food and Farming

Food and agriculture also featured on the agenda during the first week of COP28, with President Al-Jaber promising to make the adaptation and transformation of food systems a priority during the discussions, when it previously sat at the periphery in climate negotiation.

In a subsequent Declaration the delegates committed to several objectives, including pursuing to integrate agriculture and food systems into National Adaptation Plans, Nationally Determined Contributions, Long-term Strategies, National Biodiversity Strategies and Action Plans, and other related strategies before the convening of COP30.

Health and Wellbeing

COP 28 saw the very first ‘Health Day’ at a COP climate conference.  The programme focused on public health-related issues stemming from climate change, especially respiratory and water-borne diseases, food insecurity and water scarcity.

The resultant declaration includes commitments to build more climate-resilient health systems, strengthen cross-sectoral collaboration to reduce emissions and maximise the health benefits of climate action, and to include health in the design of the next round of all National Adaptation Plans.

The declaration also recognises that health organisations, especially in low- and middle-income countries currently lack the financial commitment to accelerate scientific research or to support the climate resilience of national healthcare systems.

Going Fossil Free

Of course, the biggest announcement of the conference came out in extra time, in the final negotiations which ran a day behind the original schedule.

The COP nations agreed to transition away from fossil fuels in our energy systems, beginning in this decade. The transition is to be completed in a just, orderly and equitable manner to achieve net zero by 2050.

The Global Pledge on Renewables and Energy Efficiency commits signatories to triple the global installed capacity of renewable energy and to double the rate of global energy efficiency improvements by 2030.

There is also an agreement to tackle methane and other non-CO2 emissions in this decade, and to transition away from inefficient fossil fuel subsidies that do not address energy poverty or the just transition.

The phase out of fossil fuel subsidies will also be matched by a pledge from the oil and gas industry to end routine flaring in their operations by 2030.

Other noteworthy energy-related developments include a significant focus on nuclear power and especially on research and investment into nuclear fission.

Twenty-two countries led by the US and including France, the UK, South Korea, Japan and Ukraine pledged to work together on the “aspirational goal” of tripling nuclear energy capacity from 2020 to 2050.

The push for nuclear has been welcomed by many in the energy and decarbonisation sectors, recognising the role  nuclear energy can play in providing secure energy baseload throughout the net-zero transition.

Meanwhile, a collaboration between Kenya, Denmark, Germany, the UAE and led by the International Renewable Energy Agency was back on stage after having launched in September of this year, announcing the expectation to offer $600 billion to African nations for wind and solar generation.

So, what does it all mean?

These discussions, while important, can feel very disconnected from the day to day. Will our energy prices or reporting requirements change tomorrow as a result of the announcements from COP 28 today?

Unlikely, but impacts will trickle down to affect how we approach sustainability in business.

The continued focus on financing climate action provides some assurance that both public and private funding will remain or increase, and there will be significant opportunity to invest in buildings and processes for organisations who can find the right blend of subsidy, innovation and leadership.

Business and civil leaders should continue to pay attention to transport decarbonisation efforts and I would urge businesses to engage with local government to identify areas where partnership working can improve the attractiveness of a region.

The introduction of a Health Day reflects the growing recognition of how the environment and health are interconnected – something that I know our NHS clients have been aware of for decades. I hope to see increased support to enable our hospitals and other public services to adapt their estate in readiness for changing climate patterns.

Sustainable Agriculture remains an important sector to policy makers and regulators as they seek to ensure we have resilient global food systems. It will be important to monitor the translation of COP discussions into domestic policy. 

In particular, I believe we will see more focus on biodiversity and nature-based solutions for climate adaptation aligned with the emergence of more robust rules for the Voluntary Carbon Market. This is expected to create both opportunity and workload for many of Inspired’s clients.

Lastly, but most significantly the shift away from fossil fuels for energy generation is expected to boost infrastructure investment and research into resilient energy systems – with nuclear at the front of that queue.

The text of the agreement still offers a lot of room for interpretation so we will need to watch how this plays out in practise and we can expect to see a significant focus on the hard to abate sectors and on fuel switching, to replace natural gas with greener alternatives such as biogas.

In the short to medium term, this benefit may come at a cost of higher prices, especially on non-domestic end-users, for renewable or “blue” nuclear energies.

Whatever happens, Inspired will be at our clients’ side making sure you continue to access the best that the market can offer and have the support you need to adapt your estate. Energy efficiency will be king.

Final Statements

There’s still a lot to do, with several decisions postponed, particularly those relating to nature and biodiversity. Other topics reached determination but need significant further attention to complete the translation of the COP agreement into a workable rule book for the world.

In the end, though, Al-Jabar and his team managed to bring global leaders together to approve the final working and bring down the gavel on the Dubai Agreement.

After a rocky start, COP28 has become a remarkable year in climate policy, standing alongside or even on the shoulders, of COP21 which produced the Paris Agreement.

Thirty years of climate conferences. One historic decision. A global agreement to transition to cleaner energies. Now we await the devil in the transition paperwork detail.